Family Finance
Exam Materials
Course Introduction
Family Finance explores the principles and strategies essential for managing personal and household financial resources effectively. The course covers topics such as budgeting, saving, credit management, insurance, tax planning, investments, and retirement planning, all within the context of family life. Students will learn to develop financial goals, assess financial situations, make informed decisions, and address financial challenges faced by families across various life stages. Emphasis is placed on practical tools and real-world scenarios to promote financial stability and well-being.
Recommended Textbook
Personal Finance 6th Canadian Edition by Kapoor
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15 Chapters
1555 Verified Questions
1555 Flashcards
Source URL: https://quizplus.com/study-set/3061
Page 2
Chapter 1: Personal Financial Planning: An Introduction
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87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/60765
Sample Questions
Q1) What types of economic conditions are commonly associated with personal financial decisions? How can these risks be evaluated and minimized to reduce personal and financial difficulties?
Answer: Common risks are inflation, changing interest rates, economic conditions, and personal factors such as health, safety, and financial costs. Risks can be minimized by gathering information and by researching financial decisions.
Q2) Present value computations is also called discounting.
A)True
B)False
Answer: True
Q3) If you put $1,000 in a saving account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years?
A) future value of a single amount
B) simple interest
C) present value of a single amount
D) present value of a series of deposits
E) future value of a series of deposits
Answer: A
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3
Chapter 2: Money Management Strategy: Financial Statements and Budgeting
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) Which of the following financial documents would most likely be stored in a home file?
A) Serial numbers of expensive items
B) Personal financial statements
C) Mortgage papers, title deed
D) Birth, marriage and death certificates
E) Guaranteed investment securities
Answer: B
Q2) A person's net worth is computed by
A) subtracting total liabilities from total assets.
B) deducting current living expenses from total assets.
C) adding assets and liabilities
D) subtracting assets from current liabilities.
E) adding liabilities and budgeted expenses.
Answer: A
Q3) Opportunity costs are not only associated with money management decisions involving long-term financial security.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Planning Your Tax Strategy
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Identify the correct statements
I. Tax deductions are more valuable to a high income earner than tax credits.
II. RESPs are excellent income splitting vehicles for families with young children.
III. Students can deduct moving expenses when they move back home to take up a summer job.
A) I and II, only
B) II and III, only
C) I and III, only
D) I, II and III
E) I only
Answer: D
Q2) Which of the following would be excluded from total income to obtain net income?
A) contributions to RPPs
B) mortgage interest
C) child support payments
D) foreign income exclusion
E) charitable contributions
Answer: C
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Chapter 4: The Banking Services of Financial Institutions
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78 Verified Questions
78 Flashcards
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Sample Questions
Q1) When interest rates are rising, a person would be best served by
A) short term loans
B) long-term savings instruments.
C) short-term savings instruments.
D) variable-rate loans.
E) short-term loans and long-term savings instruments.
Q2) The yield on a savings account is also referred to as
A) liquidity.
B) compounding.
C) asset management.
D) insolvency.
E) rate of return.
Q3) If the annual rate is 8%, and the interest is compounded quarterly, what is the effective annual rate?
A) 8.00%
B) 10.25%
C) 10.38%
D) 7.85%
E) 8.24%
Q4) What are the main types of financial institutions used by consumers?
Page 6
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Chapter 5: Introduction to Consumer Credit
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) Which of the following agencies can produce for a subscribing creditor, almost instantaneously, a report about your past and present credit activity?
A) The Bank of Canada
B) The Canada Customs and Revenue Agency
C) Your financial institution
D) A debit bureau
E) A credit bureau
Q2) Generally, most of the information in your credit file may be reported for only 3 years.
A)True
B)False
Q3) Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.
A)True
B)False
Q4) You should sign your new credit cards as soon as they arrive.
A)True
B)False
Q5) What are the two general rules of measuring credit capacity?
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Chapter 6: Choosing a Source Credit: the Costs of Credit
Alternatives
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Government of Canada student loans
A) are available to all full-time and part-time post-secondary students regardless of financial need
B) are offered only in Ontario and Quebec
C) are not required to be repaid
D) are the same as student grants
E) program is called the Canada Student Loans Program
Q2) What can you do if you are unable to meet your credit obligations?
Q3) The longer the term of the loan the greater the amount of interest charges that must be paid.
A)True
B)False
Q4) Lines of credit usually charge a variable interest rate, tied to the lender's prime rate. A)True B)False
Q5) Over-indebtedness is one of the nation's main family financial problems.
A)True
B)False
Q6) What are the major sources of consumer credit?
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Chapter 7: The Finances of Housing
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93 Verified Questions
93 Flashcards
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Sample Questions
Q1) An escrow account is designed to reduce the cost of a mortgage.
A)True
B)False
Q2) Renting is more advantageous than buying a home for
A) lower short-term living costs.
B) financial benefits.
C) long-term investment purposes.
D) receiving tax benefits.
E) permanence of residence.
Q3) The amount of the down payment will affect the amount of mortgage a person can afford.
A)True
B)False
Q4) A conventional mortgage usually involves
A) a variable interest rate.
B) a government guarantee.
C) a balloon payment.
D) equal payments.
E) a payment cap.
Q5) What factors influence the type of housing a family will select?
Page 9
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Chapter 8: Home and Automobile Insurance
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) The purpose of minimum insurance legislation is to
A) risk of injury or death.
B) possibility of damage, destruction or theft.
C) third party liability.
D) A and B are correct.
E) A, B and C are correct.
Q2) Identify the areas covered by tenants' insurance.
I. Personal property protection.
II. Additional living expenses.
III. Personal liability.
IV. Replacement value of premises.
A) I, II and III only
B) I and III only
C) II, III and IV only
D) I, II, III and IV
E) I, II, and IV
Q3) Replacement cost for settling property insurance claims is more costly than the actual cash value method.
A)True
B)False
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Chapter 9: Life, Health, and Disability Insurance
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) The premium for the whole life policy increases with your age.
A)True
B)False
Q2) Group health insurance covers all of your health insurance needs.
A)True
B)False
Q3) The price that a company charges for a life insurance policy is affected by
A) the company's cost of doing business.
B) inflation.
C) the seasons.
D) provincial regulations.
E) federal regulations.
Q4) The incontestability clause stipulates that the insurance company can dispute the validity of the policy during the insured's lifetime.
A)True
B)False
Q5) Critical insurance illness is gaining recognition in Canada as a valuable insurance tool.
A)True
B)False
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Chapter 10: Fundamentals of Investing
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) The basic idea behind a hedge fund is to take two simultaneous positions in two different investments in order to reduce risk.
A)True
B)False
Q2) An example of ____________ risk occurs when an investment does not keep up with prices that are increasing in the overall economy.
A) market
B) interest
C) inflation
D) business failure
E) current
Q3) Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.
A)True
B)False
Q4) The fees for investor services and newsletters may range between $30 and $750 a year.
A)True
B)False
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Chapter 11: Investing in Stocks
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) The most important priority that an investor in preferred stock enjoys is receiving cash dividends before common shareholders are paid any cash dividends.
A)True
B)False
Q2) A small cap stock is a stock that typically sells for less than 1$ per share.
A)True
B)False
Q3) A bear market develops when investors are optimistic about the overall economy and purchase stocks.
A)True
B)False
Q4) Most speculators use a buy and hold technique.
A)True
B)False
Q5) The NASDAQ is an electronic marketplace for over 10,000 different stocks.
A)True
B)False
Q6) What is an option? What is the difference between a call and put option?
Q7) What is the primary difference between common stock and preferred stock?
Page 13
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Chapter 12: Investing in Bonds
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) A collateral trust bond is secured by a pledge of securities and is oft en issued by companies that do not own many fixed assets but do own other securities.
A)True
B)False
Q2) A mortgage bond is a corporate bond secured by various assets of the firm.
A)True
B)False
Q3) In reality, there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.
A)True
B)False
Q4) The price at which a dealer is willing to buy a government security is known as the ____________ price.
A) bid
B) asked
C) contract
D) government
E) adjusted
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Page 14
Chapter 13: Investing in Mutual Funds
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Although mutual funds are popular among individual investors, most people do not use them as part of a registered retirement account.
A)True
B)False
Q2) The management fee for most mutual funds ranges between ____________ percent.
A) 0.5 to 4
B) 1 to 2
C) 2 to 4
D) 5 to 6 1/2
E) 7 to 8 1/2
Q3) The net asset value for a mutual fund share is calculated by dividing the value of the fund's portfolio by the fund's liabilities.
A)True
B)False
Q4) In a newspaper quotation, NAV stands for "not accessible value."
A)True
B)False
Q5) Why do investors purchase mutual funds instead of purchasing stocks, bonds, or other investments on their own?
Page 15
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Chapter 14: Retirement Planning
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) During your retirement, your employer's health insurance plan and provincial health insurance will cover your medical expenses.
A)True
B)False
Q2) What is the principal difference between a life annuity and a fixed-term annuity?
Q3) The most common ones are adult lifestyle/retirement communities, life lease housing, and retirement homes. Briefly describe the characteristics of each of these alternatives.
Q4) When I retire, my pension benefits will increase to keep pace with inflation.
A)True
B)False
Q5) Annuities are meant to provide retirement income in much the same way as a salary provides regular income.
A)True
B)False
Q6) What are important steps in retirement planning?
Q7) What are the possible sources of income for retirees?
Q8) How can retirees avoid housing traps?
Page 16
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Chapter 15: Estate Planning
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) A large percentage of people do little or nothing to provide for those who will survive them.
A)True
B)False
Q2) A person or institution that holds or generally manages property for the benefit of someone else under a trust agreement is called a(n)
A) beneficiary.
B) executor.
C) trustee.
D) guardian.
E) executrix.
Q3) A handwritten will is called a(n):
A) formal will.
B) holographic will.
C) statutory will.
D) letter of last instruction.
E) informal will.
Q4) It is not necessary for every adult to have a written will.
A)True
B)False
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